Exam Alert: SEC rule excludes home value from net worth calculation for “qualified clients”
A qualified client is a client that may be charged performance-based fees by an investment adviser. The threshold for determining whether a client is a qualified client is if they have at least $1 million in assets under management with the adviser or if they have a net worth of at least $2 million. An SEC rule change announced on February 15, 2012, will exclude the value of an investor's home (primary residence) from the net worth calculation. The rule amendment will take effect 90 days after publication in the Federal Register.
Source: SEC Release 2012-29
This alert applies to the Series 63, Series 65, Series 66, and Series 24.
Exam Alert: SEC alters investment adviser registration and reporting requirements
The SEC has adopted changes to the registration and reporting requirements that private fund advisers face. Unless the private fund adviser meets an exemption, they must register with the SEC. Exemptions from registration are provided for venture capital fund advisers and private fund advisers with less than $150 million in assets under management in the U.S., though these advisers must still report certain business information. Foreign private advisers are exempt from the registration and reporting requirements.
Source: SEC Release 2011-133
Exam Alert: SEC approves exemption from investment adviser registration for “family offices”
On June 22, 2011, the SEC approved an exclusion for "family offices" from the regulations of the Investment Adviser Act of 1940. The new exemption applies to a company that only provides advice to "family clients," is wholly owned by "family clients," and does not hold itself out to the public as an investment adviser. "Family clients" include family members, key employees, and certain other clients.
Family offices were typically covered under the exemption for advisers with fewer than 15 clients, but that exemption will be removed under Dodd-Frank changes.
Relevant to the Series 7, 6, 65, 66, 63, 24 and Series 26 exams.
Source: SEC Release 2011-134
Exam Alert: Private advisers must register with the SEC
Effective July 21, 2011, investment advisers to most private funds (hedge funds and private equity funds) must register with the SEC. Previously, these advisers had been exempt due to the "private adviser”" exemption. The Dodd-Frank Act replaces this exemption with narrower exemptions for certain advisers, including advisers that exclusively advise venture capital funds and private fund advisers with less than $150 million in assets under management in the United States.
http://www.sec.gov/spotlight/dodd-frank/hedgefundadvisers.shtml